Expect the ACCC's enforcement activity to increase
on the back of the outcome of numerous market studies, and a
renewed focus on large and small cartels, as well as higher
penalties for Australian Consumer Law breaches such as false and
misleading conduct.

2018 is shaping up as another very busy year for competition and
consumer law. Following the changes to the Competition and Consumer
Act 2010 (Cth) which took effect in November 2017, and
Treasury's ongoing public consultation on proposed changes to
the Australian Consumer Law (ACL), the
announcement of the ACCC's investigation and enforcement
priorities should not be entirely unexpected or surprising.
However, there are specific areas which should result in more ACCC
activity. A snapshot of those areas is set out below:

When announcing the Australian Competition and Consumer
Commission's plans for the coming year, Chairman
Rod Sims emphasised an intention to focus on the areas and
issues that "are really relevant to the lives of ordinary
Australians" such as competition in electricity and gas
markets. He also stressed the ACCC's desire for increased
penalties in consumer law cases where the ACCC's view is that
the detriment is at least commensurate to cartels and in many cases
higher.

Market studies

The ACCC has recently completed, and has several ongoing, market
studies in relation to the new car retailing industry,
communications sector, residential mortgages, gas, electricity
supply and prices, dairy, and cattle and beef. For example, on 26
February,
the ACCC invited public submissions in response to an Issues
Paper it released as part of its inquiry into digital platforms.
Submissions are due 3 April 2018 and the ACCC is interested in
assessing the market power of digital platforms, implications for
content creators, advertisers and consumers, longer term trends in
media and advertising, and the effectiveness of current
regulation.

Banking and financial services

The Banking Royal Commission and financial services inquiries by
APRA are not the only areas that will be keeping banks and other
financial institutions busy this year.

In the 2017-18 Budget, the ACCC was given a funding of $13.2
million over four years to establish a Financial Services Unit to
undertake regular inquiries into competition issues across the
financial system. An additional $1.2 million has been provided for
a price inquiry into residential mortgage products; an interim
report is expected in the next couple of months.

Targeting misuse of market power and concerted practices

The new concerted practices and misuse of market power
provisions will be a major focus for an ACCC that fought hard for
these provisions and intends to use them in cases which it could
not bring before the provisions were introduced.

For concerted practices, expect it to be used where there are
communications or practices which do not amount to an agreement or
an understanding as to any specific plan, but which nonetheless
assist the parties to reduce or avoid competing with each other by
reducing the uncertainty that competition on the merits brings.

In the cases of concerted practices, unilateral conduct by a
firm with substantial market power may now also breach the Act
where it has the purpose or effect of substantially lessening
competition.

The "substantial lessening of competition unit"
established following the Harper Review will focus on
investigations and enforcement under the concerted practices
prohibition and other provisions of the CCA where the test is
whether conduct has the purpose or effect of substantially
lessening competition. This is an area where the ACCC is keen to
increase its activity, on the basis that it has not done enough to
test problematic conduct under this test.

Higher penalties for breaches of the consumer law

One of the key messages of Chairman Sims was a desire for
increased penalties in competition and consumer law cases under the
"percentage of turnover" limb of the penalty provisions
of the CCA . For some time, the ACCC has considered the penalties
for unlawful conduct in Australia are too low and is keenly
awaiting an OECD report at the end of March which will compare
penalties in OECD jurisdictions. It is expected that that OECD
report will show that penalties for competition and consumer law
breaches in Australia are less than in Europe, the US and some
Asian countries.

If this is the case, it is likely to give further momentum to
the Bill which was introduced to Parliament last week to increase
consumer law penalties from a current maximum of$1.1m per
contravention to the greater of $10m, three times the benefit
obtained or, where benefit cannot be calculated, 10% of total
annual turnover (i.e. the standard which applies to competition law
breaches). This "profound change" is designed to ensure
that the current low penalties are not seen as a cost of doing
business (especially by big business such as large
multinationals).The idea is that large businesses should "bear
penalties which are commensurate to their size, in order to achieve
[the ACCC's objectives of] specific and general
deterrence".

More cartel prosecutions

Cracking cartels are always an enduring priority for the ACCC.
ACCC action against cartel conduct is set to ramp up with Chairman
Sims noting the recent prosecutions involving Japanese shipping
companies as well as the first criminal cartel prosecution against
an Australian company and its managers, Country Care Group Pty Ltd
(the first Australian action where individuals have been
prosecuted).

This year Mr Sims has indicated that the ACCC is "working
very hard on a number of live investigations at an advanced
stage" and that it intends to be very deliberate in referring
up to five potential criminal cartel actions to the DPP. Its focus
will not be on technical cartels, but on cartels, large and small,
which take advantage of the vulnerable or have widespread consumer
detriment - that is cartels where the public would say "of
course you should take them on".

Conclusion

As always, business should expect the ACCC to be proactive
during 2018 and to seek to enforce the new provisions of the CCA.
Businesses, especially those which are well established, should
familiarise themselves with the ACCC's agenda and prepare for
scrutiny. Should you require assistance with any of these issues
please get in touch.

Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
Persons listed may not be admitted in all states and
territories.

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